The difference between success and failure in Forex trading is very likely to depend upon which currency pairs you choose to trade each week, and not on the exact trading methods you might use to determine trade entries and exits. Each week I am going to analyze fundamentals, sentiment and technical positions in order to determine which currency pairs are most likely to produce the easiest and most profitable trading opportunities over the next week. In some cases it will be trading the trend. In other cases it will be trading support and resistance levels during more ranging markets.
Big Picture 26th June 2016
Last week I predicted that the best trades for this week were likely to be short USD against Gold, JPY, CAD and CHF. This turned out to be a profitable forecast overall, as two of these pairs produced a positive result: USD/JPY 1.81%, GOLD 1.29%, USD/CAD -0.77%, USD/CHF -1.16%. The average result was a gain of 0.29%.
The focus of the market is strongly on the shock British referendum result at the end of last week. The British people voted to leave the European Union. Exactly how and even whether this can be executed has become an open question as Britain has descended into political and even constitutional chaos since the result became apparent, the details of which are too complex to be discussed here. Until some clarity is reached, we can expect this issue to become a running sore, with a great deal of volatility in the British Pound. However it is significant that the British Pound has not depreciated more strongly, as many pundits expected that a Leave vote would see the currency plunge by up to 20%.
This week therefore looks as if we can stick with “risk off†meaning short GBP, and long Gold, and JPY.
Fundamental Analysis & Market Sentiment
Fundamental analysis will probably be of very limited use this week. There is an extremely light news agenda scheduled, and the market’s attention will remain focused on political developments within the U.K. and European Union resulting from last week’s Brexit vote, as well as a Spanish General election that is being held today.
